Europe’s automotive industry has long stood as one of the continent’s strongest and seemingly most unshakeable pillars. Germany was shaping what lay ahead, Central Europe was putting it together, and the southern part of Europe was supplying the labor and industrial capacity required. As the EU’s second-largest car producer, Spain was certainly significant, yet it rarely occupied the central stage in Europe’s strategic thinking. And even though that gearbox appears complete and well-engineered, the reality is that the automotive landscape is being compelled to evolve.
With the move toward electric vehicles, the elements that determine industrial competitiveness have been shifting at a rapid pace. Today’s European automobile sector is less dominated by mechanical engineering, combustion-engine supply chains, or the prestige of German brands, but three new pillars are guiding the sector at present: affordable energy, the capacity to mass-produce affordable electric cars, and access to Chinese technology chains. In all three domains, Spain is starting to emerge as one of the best-positioned countries in Europe.
“The future industrial center of gravity of the European electric vehicle could conceivably shift southward”
Spain blends several advantages that are difficult to find together elsewhere on the European continent: abundant renewable energy, relatively competitive electricity prices, large automotive plants already in operation, robust logistics infrastructure, and a political relationship with China that is far less ideological than those of other European partners. In Brussels, Berlin, and Paris, a notion that would have seemed unlikely just a few years ago is now gaining traction: the future industrial center of gravity of the European electric vehicle could conceivably shift southward.
The logic starts with energy
The electric car is more than a technological upheaval; it represents an energy transition embedded within a new industrial policy. Batteries, gigafactories, and electrified production chains demand enormous amounts of stable, reasonably priced electricity. Moreover, since Russia’s invasion of Ukraine, this factor has become a decisive variable for European competitiveness.
Spain has an advantage that few large European countries can replicate quickly: a combination of solar, wind, and regasification capacity developed over many years, which helped cushion the post-2022 energy shock more effectively than others. While Germany has learned the strategic costs of relying on Russian gas, Spain has managed to consolidate a much more favorable energy position for the new industrial economy.
Industry players continue to debate who makes the best electric cars, but there is growing interest in knowing who can produce them at affordable prices. Ignacio Rodríguez Solano, director of Institutional Relations for the Renault Group, summarized it in Agenda Pública: “We’re not going to electrify Europe with €100,000 cars.”
This is where China enters the picture. In the past, Europe underestimated the speed with which China’s automotive industry was evolving. Many European companies regarded Chinese brands as cheaply built and technologically secondary. Today that perception has become obsolete.
Teresa Ribera, Executive Vice-President of the European Commission, recently stated plainly: “There was fierce opposition to that process of change. Some have even irresponsibly accused those of us who defend such changes and their industrial follow-up of defending ideological positions,” she told Marc López Plana. “Suddenly, we’re faced with two very significant factors. First, there are those who have overtaken us, and second, we’re still depending on something we don’t have [fossil fuels].”
“The Asian giant seems to be winning the race to affordable electric vehicles by a landslide”
China’s edge rests on highly automated factories, simplified production chains, integrated digital platforms, and a much faster pace of industrial development than Europe. Even as European manufacturers find themselves tangled in complex and expensive industrial structures, many Chinese firms are producing fewer models with fewer configurations, using far more efficient processes. As a result, costs are reduced and manufacturing times are significantly shortened compared with Europe. The Asian giant seems to be winning the race to affordable electric vehicles by a landslide.
The good news is that Europe’s industrial strategy is being reconsidered with a new approach. At the heart of that shift is the question of whether Europe will need to cooperate more closely with China to keep its own automotive industry alive.
Germany is starting to face facts …
In Lower Saxony, political leaders are openly raising the possibility of Chinese manufacturers building vehicles at Volkswagen’s German plants to prevent plant closures and protect industrial jobs. That notion would have been politically explosive five years ago; today it is part of the public debate.
The shift in historical direction is clear. For decades, German technology flowed into China. Now a portion of German industry is beginning to wonder how much Chinese knowledge it will need to stay competitive. But Germany also suffers from structural problems that Spain does not feel with the same intensity.
Energy costs are higher in Germany. The transition of industry has been slower. Productive structures are more rigid. And Berlin remains torn between two contradictory impulses: reducing strategic dependencies on China, while at the same time avoiding the competitive collapse of its export sector.
… and Spain operates differently
Madrid has maintained a much more pragmatic, less ideological relationship with China than other large European countries. While Brussels tightens its rhetoric on de-risking, strategic autonomy, and economic security, Spain increasingly views Chinese industrial investment mainly as an opportunity.
Chinese manufacturers seeking to establish themselves in Europe require several things at once: access to the European market, ports, industrial land, renewable energy, and governments willing to facilitate investments rather than turning them into a perpetual political battle. Today, Spain can practically meet all of those conditions.
“If Europe’s industrial center of gravity starts shifting toward regions with cheaper energy and better maritime access, Spain automatically gains relevance”
Geography also works in Spain’s favor. The Iberian Peninsula occupies an increasingly strategic position on new industrial and energy routes: connections to the Atlantic, access to the Mediterranean, proximity to North Africa, and growing logistics capabilities in ports like Valencia, Barcelona, and Algeciras. If Europe’s industrial center of gravity starts shifting toward regions with cheaper energy and better maritime access, Spain automatically gains relevance.
The industry is already moving in that direction
Today, CATL, the Chinese battery giant, is aggressively expanding its European footprint. SAIC Motor, owner of the MG brand, is negotiating to build a new factory in Galicia, with the Xunta offering the Plisan industrial park, although Ferrol has also been cited as a potential location. Stellantis has signed agreements with Leapmotor to produce Chinese electric vehicles for the European market: the brand will produce the B10 in Zaragoza starting this year and could manufacture an electric model in Villaverde from the first half of 2028. Renault has publicly insisted that the major challenge today is no longer luxury, but affordable electric cars.
All these moves point to the same conclusion: Europe’s automotive future will likely feature more Chinese technology, more joint ventures, and many more hybrid production chains than Brussels imagined a few years ago.
“There’s no need to invent an industry from scratch, because Spain already has large facilities utilized by Volkswagen, Seat, Ford, Renault, and Stellantis”
And Spain could become one of the main beneficiaries of that transformation. In addition, the country has an asset that Brussels often underestimates: an already solid automotive industrial culture. There’s no need to create an industry from nothing, because Spain already hosts large facilities used by Volkswagen, Seat, Ford, Renault, and Stellantis, along with supplier networks, skilled labor, and entire regions organized around the automobile. What will need to change is the strategic context surrounding those existing assets.
In the old European industrial model, Spain occupied a subordinate role within an architecture centered on Germany. In the new electric framework, cheap energy and industrial flexibility carry more weight, which is reshaping power dynamics within Europe.
The path is not guaranteed
While acknowledging its strengths, Spain still faces notable weaknesses, including insufficient energy interconnections with Europe, bureaucratic sluggishness, regulatory fragmentation, and external technological dependence. Moreover, the relationship with China could become politically delicate if Brussels chooses to tighten the screws and adopt positions divergent from those of Madrid.
And there’s another risk: Europe could end up assembling Chinese technology without building its own capabilities. That debate is already moving through European institutions. Some argue that the EU could repeat mistakes similar to those made with Russian gas or Asian solar panels. Others contend that rejecting industrial alliances with China would merely accelerate European deindustrialization.
“There’s no need to reinvent the wheel” The next big automotive hub for Europe might emerge not from the continent’s old industrial core but from the South
The electric car will likely serve as the first major laboratory for this contradiction. Because the central question seems no longer whether Chinese investment will arrive in Europe, but where it will land. In that contest, Spain appears to be improving its position, thanks to the factors listed above: inexpensive energy, existing automotive infrastructure, strategic ports, renewable capacity, and so on.
In the past, Europe’s automotive hierarchy seemed anchored to Germany, but the shift to electric is beginning to redraw that map. In any case, Europe’s next major hub could emerge not from the continent’s traditional industrial heartland but from the South, powered by solar energy, Chinese capital, and a global reorganization that Europe is still trying to understand.
